How to Pay VAT on Commercial Properties in UAE?

Confusions

A lot of confusions has been seen in the minds of the people regarding VAT in UAEsince it got implemented. This might be because it is really new and people are not actually well aware of its working and the criteria they have to meet in order to pay the VAT.

Discussions

A lot of discussions are also occurring on the topic of the VAT so that this might get explained to the people in the best possible manner.

Commercial property- not Exempt to VAT

The commercial property of the people in UAE is not exempt from the VAT. This means that people having the commercial property are obliged to pay the VAT no matter whether the land is on lease or has been purchased by the person. In addition to that, the tenants, as well as purchasers, have to pay VAT as well. this shows that no commercial property has been forgiven from the VAT. So, everyone who comes under the category must pay VAT which is 5percent.

Issue a Tax Invoice

A tax invoice must be issued by the seller to the purchaser for the purchase price while selling the commercial property. A lot of people do not consider it attentively but they should pay attention to this thing as it is very important and they should not close their eyes on this topic at all.

Sellers and Purchasers- Register for VAT

Both the sellers as well as the purchasers must register for VAT.

If the annual rent of the person exceeds from the tax threshold, the seller must get registered for VAT. The threshold for it is Dh375,000 per year. So, all the sellers must see if their annual rent is exceeding the threshold or not. If it is exceeding the threshold, e must register for VAT or else he will get punished when get caught.

Note that not only the companies have to register for VAT but also vat registration in UAE is must for the people having the commercial property as well.

Owners are also Liable to Register for VAT

This confusion might be in the minds of so many people as the people might be thinking that the owners of the commercial property do not have to pay ta. No, this is not true. All the owners of the commercial property are liable to register for VAT because the sale of the commercial property is a taxable supply so, register for it is mandatory.

There should be specific VAT provisions for the property sale agreements after January 1. This should be the responsibility of the one who purchases.

The vat should be declared by the sellers on the purchase price as output VAT whereas the purchaser should claim it to be as input VAT.

both the purchaser, as well as the seller, should register for VAT before doing any transaction but the first move is to be made by the purchaser to declare on the Federal Tax Authority’s e-services portal.

Requirements for the Purchaser

seller’s tax registration number

the VAT amounts

the commercial property plot number

the date of sale and the department of the land where the property is registered.

The amount will be considered as output VAT for the seller whereas it will be considered as input VAT for the purchasers.

Exceptions regarding the Commercial Property VAT in Dubai, UAE

Now here is an exceptional form all that we read above;

The VAT law In UAE says that if the commercial property is being sold with an ongoing tenant then the sale will be considered is zero-rated. This means that no VAT will be applied to the person who is occupying the property after its sale. Note that both the parties need to be registered for this as well. in addition to that, there are some rules and regulation in this case as well. all of these rules are to be followed by the people who are in the whole business.

Conclusion

This is how the VAT would work in case of commercial property. Although the commercial property is not exempt from VAT still there are some conditions in which the VAT will be zero-rated means that no VAT will be charged in those cases.

The people must get registered for VAT and they should see where they stand as well. this will help them in getting the idea whether they should pay the VAT or not because the confusions might waste your money. so, make sure that all of your confusions are clear before you proceed any sale or purchase. All these things will really prove to be helpful in the future in case of the VAT.

Vat consultancy agencies should be consulted that a Tax agent in UAE guides you about all the nitty and gritty of the VAT.

For more than 30 years, Farahat & Co. has been one of the leading firms in the UAE that deals with accounting. It continues to be one as we remain to be known even with the new tax regime that has found our country. For more information and consultation with regard to your needs in VAT accounting, you can book an appointment with us here.